The Third Rail — Validity of the Loans, Notes and Mortgages

SEE This is it! WHERE’S THE NOTE, WHO’S THE HOLDER: ENFORCEMENT OF PROMISSORY NOTE SECURED BY REAL ESTATE

The strategy of distraction is easy. Simply point the finger at paperwork mix-ups and you avoid the underlying problems, liability and consequences of a deformed, twisted title problem. “We’ll fix it” is the message, but how. Who is now going to appear in court and say that the loan was assigned and endorsed and delivered as per the requirements of the PSA and the REMIC statutes? Where the media is failing us is in its failure to connect the dots. Just how difficult is it, step by step? —-

  • If we are willing to admit that the foreclosure filings are faulty, how hard is it to question whether the mortgage and loan filings were faulty?

  • If we are willing to admit that the foreclosure filings are faulty, how hard is it to question whether properly dated and executed assignments and endorsement and delivery of the loan documents even exist?

  • If we are willing to admit that the investors (the real lenders in these transactions) were defrauded, how hard is it to conceive that the homeowners as “borrowers” (purchases of unregulated securities) were defrauded in the same way with the same false premises?

  • If we are wiling to admit that there were faulty servicing processes, how hard is it to question whether there were faulty securitizing processes?

  • Why does anyone make the assumption that the loans are in “pools” when all evidence is to the contrary? Why are we taking self-serving statements (“reports”) from investment bankers who cheated investors, homeowners and taxpayers as anything other than an illusion?

  • If we are willing to admit that the banks’ collective profit constitutes ill-gotten gains, how hard is it to question how the losses should be allocated?

  • If we are willing to admit that there were trillions of dollars paid or advanced in loss mitigation, how hard is it to question how those funds should be allocated to investors and homeowners?

  • If we are willing to admit that there is a pattern of conduct using fabricated forged documents in satisfactions of mortgage and in the pursuit of foreclosures, how hard is it to imagine that there were fabricated, forged documents in the origination of the loan?

  • If the origination of the loans were faulty, sold on false premises, and defective according to law, why should the obligation be considered secured?

  • If the originator was paid in full, why should the obligation be considered due and payable?

  • If we are willing to admit that the legal requirements of the obligation were not met and cannot be fixed at law, then how hard is it to imagine that there might be an equitable remedy that a real party in interest might be able to prove with real evidence? And if there is no such party or no such evidence why are we pretending that foreclosures in favor of entities that never paid a penny toward funding the loan could ever be conceivably proper or legal?

15 Responses

  1. Jose:

    I take it you live in Virginia. If so I feel for you. Let me see if I’ve got my fact correct. Virginia was the first colony, one of the thirteen original states, has the oldest legislature in the country, is the birth place of 8 presidents, was ground zero for the revolution and our Constitution and they now treat their citizens like that. They should be ashamed.

  2. Good article , thanks…..

  3. WE NEED TO PUSH AND PRESS THE PRESS, OUR FRUSTRATION AND ANGER NEEDS TO BE FOCUSED AND DIRECTED TO GET THE FACTS OUT THERE.

    WE NEED TO DEMAND THAT THE SO CALLED EXPERTS DISCLOSE THEIR INVESTMENT POSITIONS. FOR MANY OF THIS EXPERTS THEIR PAYCHECKS COME FOR DEALING WITH THE FELONIOUS THIEVES ‘SERVICERS AND THEIR LAWYERS”.

    YOU SEE WE ARE GUILTY BECAUSE BY THEIR IRRESPONSIBLE BETS AND FRAUDULENT LENDING PRACTICES, WE BOUGHT INTO THEIR VERSION OF THE AMERICAN DREAM, A REAL NIGHTMARE.

    I READ THE VIRGINIA PROPERTY CONVEYANCE STATUTES TODAY AND THEIR AMENDMENTS MADE ON 2006 AND 2010 AND THEY LITERALLY GAVE A LICENSE TO CHEAT, STEAL, FORGE, FAKE, FABRICATE AND DESTROY EVIDENCE TO FORECLOSE ON YOU. THERE ARE NO VISIBLE PENALTIES OTHER THAN A $500 FEE FOR FILING A WRONGFUL LIEN.

    GOOD JOB VIRGINIA, WAY TO SCREW 15 MILLION CITIZENS AND STRIP THEIR RIGHTS AND ACCESS TO DUE PROCESS.

    THE WORST PART IS NOT REALLY THE MEDIA IS THE FACT THAT WE ARE GETTING USED TO LIVING AND CONSUMING BITS OF INFORMATION, WE ARE BECOMING SHALLOW THINKERS AND TO ACTUALLY THINK IS GETTING REALLY UNCOMMON.

    JUDGES ARE NO DIFFERENT THAN ANY OF US. THE PRESS HAS GOTTEN USED TO THE BIT REPORTING. IT IS UP TO US TO RAISE THE TEMPERATURE AND EDUCATE THE JOURNALISTS, JUDGES, LAWYERS, LEGISLATORS AND REGULATORS.

    EVEN THE FBI, IF THE FRAUDS OF WHICH MR. MOZZILLO WAS BEING ACCUSED INVOLVED INTERSTATE COMMERCE AND THESE LOANS BY COUNTRYWIDE MADE LOAN ALL OVER, THE FBI SHOULD HAVE WALKED IN AND ARRESTED THIS GUY.

    POOR PEOPLE SERVE, RICH GUYS WALK. AND BOA IS PAYING MOST OF HIS SETTLEMENT.

    THAT IS THE ADMINISTRATION MANY AMERICANS VOTED FOR, THIS AT THE END IS WORST THAN THE ELEPHANTS.

    LAW SUITS , LAW SUITS, LAW SUITS.

    ACTIONS TO QUIET TITLE,

    WE WILL FIGHT OUR WAY OUT OF THIS.

  4. Leonardo Gomez,

    Great post. And, want to say that Nomi Prins, at the start of crisis, was one of the first to come out and say that it is wrong to blame home owners.

  5. I suspect the Judges are not really thinking of the damage they are possibly inflicting on their own retirement accounts if any of their investments are in any of these Mortgage-Backed Securities (MBS) or Asset-Backed Securities (ABS) certificates, aka, the pools. The pools have been ripped off and will continue to be ripped off (if they still exist). Any attempts to stuff mortgages into these pools in defiance of the Pooling and Servicing Agreement and IRS regulations for REMIC status of the Pool is not in the best interest of the investors.

    Yet I know, first hand, that places like Litton are, indeed, making up assignments that are dated this year for loans that closed back in 2005. Placing a defaulted loan into the pool is contrary to the PSA. Placing a defaulted loan into a CLOSED pool is also in conflict with the IRS regulations for the favorable tax treatment conferred on REMICs. When this is found, the Trust will need to make some hefty payments to the IRS, impacting any proceeds for the investors. That pool HAD to close within 90 DAYS of the initial date in 2005.

  6. If anyone has documents signed by the individuals listed below please let me know:

    Monica Hardaway
    Denise Bailey
    Cindi Brantley
    Monica Hadley
    Diane Dixon

    Thank you.

  7. From AlterNet / By Nomi Prins

    Why Is the White House Against Freezing Foreclosures in the Face of Rampant Fraud?
    Treasury and Obama are facing huge financial pressure.
    October 14, 2010 |

    At first, there was a deafening silence from Treasury Secretary Tim Geithner and Fed Chairman Ben Bernanke on the foreclosure front. It was as if they: 1) didn’t read the news; or 2) were afraid someone would notice afresh their incompetence in dealing with the ongoing housing crisis and deteriorating economy, while convincing everyone that the bank bailouts and subsidizations were good for us.

    Last week, while Senator Harry Reid, House Speaker Nancy Pelosi and others in Congress were dispensing irate pre-election sound-bites, attorneys general across the country were gearing up for investigations. Banks were reluctantly announcing foreclosure moratoriums because it’s quarterly earnings season and uncertainty is bad for stock prices, and Geithner was defending TARP and mixing it up with China over the dollar. Meanwhile, the Fed was gearing up to buy more Treasuries, like some kind of rapacious alien that eats its progeny, because no one else wants our debt.

    But that changed when Geithner came out of hiding yesterday with a stance. (Bernanke is still in hiding, but will support Geithner’s view soon.) Unsurprisingly, Geithner chose to side with the likes of conservatives and CNBC. Thus, his response to Charlie Rose when asked whether he supported banks in declaring a foreclosure moratorium was: “No, I wouldn’t say it that way.”

    Why? Geithner’s logic follows the typical blame-the-little-guy-for-taking-on-too-much-debt-to-buy-a-house-he-couldn’t-afford pattern, coupled with old-style fear-mongering: if you wait and analyze what’s really going on, it might be bad for the housing recovery. And, what housing recovery is that? The one in which 25-30 percent of homes being sold are REOs (bank owned real-estate, a.k.a. foreclosed properties). On a trading floor, that’d be considered “churning,” not new value.

    The free-market, let the banks do what they do mentality was what allowed them to create a $14 trillion mountain of securities backed by precarious mortgages to begin with. Don’t look at what they’re doing, that might hurt the boom. Don’t ask them for anything in return for bailouts — that might clog the system. Don’t stop them from churning foreclosed properties — that might stop the recovery.

    But the real reason for Geithner’s reluctance about a foreclosure moratorium is that he’s scared stiff about those securities – because even if he won’t admit it, he knows that the bailout wasn’t just about TARP and Bernanke isn’t just an economic savior.

    The government owns or is backing trillions of dollars worth of assets predicated on the same or similar suspicious loans that defaulted during the 2008 crisis period, which they did nothing to stop (or force banks to restructure).

    Instead, the Fed now owns nearly $1.5 trillion of toxic assets that have no bid (meaning no one but the Fed wants them). They would have less of a bid if there was even more uncertainty about the loans that fill them. The Treasury is directly backing $400 billion of government-sponsored entity (GSE) securities, and is indirectly backing another $6.8 trillion. If foreclosed homes couldn’t be sold because of fraudulent paperwork or had to wait for more detailed inspections, you can imagine how difficult selling assets stuffed with faulty loans might be. If it’s tough to find a title for a foreclosed home, think how tough it is to back the related loan out of a pyramid of securities sitting on top of it.

  8. kevin,

    Exactly right. And, Neil is right. And, to add – you cannot “fix” affidavits/assignments – years later – when all has changed – and the conveyance was never legitimate to begin with. Even if the “chain” was properly conveyed at onset of Trust (which it was not) – that chain has changed – expanded – it did not end with the Trust.

    As far as the media – right now they are our biggest obstacle – why is this?? Why is the media doing this?? Hmmmm – because the banks pay them too???

  9. Why did the banks en masse decide to move now maybe befir it builds anymore momentum thus is our time to rally like hell. We need a big media exposure for the cause. Forget bring single minded it’s not about our Individual “agendas”

  10. YEP ! It is ok for Wall Street to lie to investors and for the banks to lie to the borrower. False securities and false appraisals utilized by Wall Street / BAnks to drive the scam. But yet the government looks the other way. Now if it were the common home owner doing this we would then be in jail. It is now time to take some measurments for the orange jump suits. These may be costly because most will be Extra Eatra Large so to fit some BIG FAT banksters and a few government officials.

  11. Another problem that I am seeing almost daily is that now that this ugly creature has been exposed, our freinds in the media are interviewing “experts” that all say what a terrible thing this foreclosure mess is for the housing market with all these people staying in their homes for free. Bad homeowners. You’re going to cost wall street money and heart ache. We (as usual) need to get a real expert out in front of main street media asking the hard questions. Why should the American homeowner knuckle under and give their houses away so that wall street isn’t put in an uncomfortable situation.

  12. Florida Case dismissed – Faulty Affidavit – Indy Mac
    ———————————————————————

    By Jonathan Weil – Oct 13, 2010 9:01 PM ET
    Jonathan Weil
    http://www.bloomberg.com/news/2010-10-14/foreclosure-fiasco-s-trail-leads-to-washington-jonathan-weil.html
    What were banking regulators doing while some of the biggest U.S. lenders routinely filed false foreclosure documents in local courthouses around the country? In the case of IndyMac Federal Bank, it turns out the Federal Deposit Insurance Corp. was running the joint.

    This may help explain why the mortgage-servicing industry got away with such misbehavior for so long. The government, in one form or another, was doing it, too.

    The facts are there for anyone to see in the records of a circuit-court lawsuit against Israel and Neena Machado, a West Palm Beach, Florida, couple who last year beat back IndyMac’s attempts to foreclose on their home mortgage. They even won a judgment ordering IndyMac to pay $38,117 in legal fees.

    IndyMac sued the Machados in November 2008, four months after the government closed its predecessor, Pasadena, California-based IndyMac Bank, which had $32 billion in assets when it was seized. The FDIC formed IndyMac Federal in July 2008 as the successor to the failed bank, and continued operating it in conservatorship before selling it in March 2009.

    Among the sworn statements IndyMac filed with the court was a December 2008 affidavit by an IndyMac vice president, Erica Johnson-Seck, who said she had personal knowledge of the amount of money the Machados owed on the mortgage. That wasn’t true, she later testified in a deposition. To be fair, there’s every reason to believe the old IndyMac was engaged in this sort of conduct already, before it was shut down.

    ‘False Affidavit’

    “There’s a lie in the affidavit,” the judge in the case, Meenu Sasser, said at a September 2009 court hearing, where she dismissed IndyMac’s complaint. “It’s a false affidavit.”

    An FDIC spokesman, Andrew Gray, said the agency is looking into the matter. “While this issue has only recently come to our attention, it is something that the FDIC takes very seriously,” he said. “The FDIC was unaware of any violation of state laws applying to servicing practices while we were in control of IndyMac Federal. FDIC staff is currently investigating this further. We are committed to working with all parties to correct any issues or violations that may be found.”

    Another point in dispute was whether IndyMac held the Machados’ mortgage note, as the bank claimed in its complaint. The Machados said it didn’t. The court never resolved the question. Whoever owns it, no one has since filed any new foreclosure action against the Machados, who continue to live in the same home, according to their attorney, Thomas Ice.

    Suspending Foreclosures

    A similar pattern is playing out around the country. So- called robo-signers penned their names to untold numbers of affidavits and other foreclosure documents that proved to be false, prompting judges in some states to throw out the banks’ claims.

    Bank of America Corp. last week said it would stop foreclosure sales nationwide while it reviewed its practices. JPMorgan Chase & Co. says it is examining files in 41 states. Ally Financial Inc.’s GMAC Mortgage last month halted evictions tied to foreclosures in 23 states. Ally is majority-owned by the Treasury Department. The attorneys general for all 50 states have opened a joint investigation.

    In her July 2009 deposition, Johnson-Seck said she and seven other people in her department signed about 6,000 foreclosure documents a week, including affidavits. She said she didn’t read all the documents before signing them and spent “not more than 30 seconds” on each one.

    The corporations for which she had signing authority included the FDIC as conservator for IndyMac, she said. Johnson- Seck declined to comment. She’s now a vice president in Austin, Texas, for OneWest Bank, which bought IndyMac from the FDIC.

    Regulators’ Role

    Now let’s look at the bigger picture. Where were the banking regulators while all this mischief was going down? For years the leaders of the Federal Reserve and the Office of the Comptroller of the Currency, among others, have been assuring the public they have onsite examiners and supervisors at all of the country’s largest banks. Before IndyMac was seized, its primary regulator had been the Office of Thrift Supervision.

    Yet there’s no sign these agencies did anything to stop any of these institutions from treating the country’s courts so contemptuously. Perhaps the regulators were clueless. Or maybe they knew there was a problem and decided to let the banks run wild in the interest of keeping their foreclosure mills humming.

    Whatever the case, they let the banking industry deal another huge, self-inflicted blow to its reputation. That’s the sort of damage regulators are charged with preventing, as part of their mission to preserve public confidence in the financial system. And to think Congress just gave the banking regulators, including the FDIC, even more authority under the Dodd-Frank Act. The more they fail, the more power they get.

    Shady Tactics

    Meanwhile, it’s an open question why the mortgage servicers and their lawyers resorted to tactics such as filing bogus court affidavits. Was it just about cutting corners? Or was it because they often don’t know who owns the mortgages on which they’re foreclosing, and decided to cheat?

    Americans expect banks to do shady things to promote their own self-interest. It’s what banks do. That’s why we have regulators — to keep the banks from putting the country at risk of, say, a nationwide foreclosure fiasco.

    The regulators keep blowing it. At IndyMac, though, the FDIC wasn’t just overseeing the bank. It was operating the bank. The industry’s minders have hit a new low.

    (Jonathan Weil is a Bloomberg News columnist. The opinions expressed are his own.)

    To contact the writer of this column: Jonathan Weil in New York at jweil6@bloomberg.net

    To contact the editor responsible for this column: James Greiff at jgreiff@bloomberg.net

  13. You have also requested dates for depositions. First, as I stated previously, the case is not yet at issue (meaning, we haven’t answered the complaint yet), and it is Universal’s intention to respond to the Second Amended Complaint (“SAC”) by way of a demurrer. In short, it is our position (as will be reflected in our forthcoming demurrer papers) that the SAC does not allege any viable claims against Universal. Under these circumstances, Universal’s position is that depositions would be premature and represent an unwarranted and unduly burdensome expense at this stage of the case. In addition, the only prospective deponent you have identified thus far is Suchan Murray. It is my understanding (though I am in the process of confirming this with my clients) that Ms. Murray is not an employee of my clients. Rather, I believe she works for MERS. If that is the case, I cannot agree to make her available for a deposition, in any event. (Of course, to the extent you attempt to depose Ms. Murray, you must serve notice of the deposition upon my office.)

    http://www.scribd.com/doc/39331209/Universal-American-Say-Suchan-Murray-Works-for-Mers-and-Not-Them

  14. This is what we need to make the judges understand. There always seems to be a breakdown in the court process. You have said it at least 3 times, educate the jurist. If you can prove to them that your opponent is lying to him…
    But how many pensions are tied up in MBS? How many judges pensions are tied up with MBS, and Citi, JPM, Wells? I think it is time to open the windows on who has investments in what before we allow them to rule from the bench without exposing their potential conflict of interest.

  15. This is exactly what the banks want to distract everyone from by their agreement to a moratorium and the focus on the faulty paperwork–these are the real issues and not some “faulty paperwork” on foreclosures.

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